A few weeks ago, billionaire activist investor Carl Icahn published an article in the Wall Street Journal that could have major implications for oil stocks PBF Energy Inc (NYSE:PBF), HollyFrontier Corp(NYSE:HFC) and CVR Refining LP (NYSE:CVRR). Icahn criticized the Renewable Fuels Standard created in 2005 to encourage the use of alternative fuels.
Carl Icahn has a friend in President-elect Donald Trump, and he may now have the political clout to make a major impact on the regulation of oil stocks.
Oil Stocks Ripped Off on RINs
According to Icahn, the problem centers on Renewable Identification Numbers. RINs are electronic credits created when oil companies blend ethanol and other renewable fuels with gasoline and diesel. Oil refiners must meet annual quotas for renewable fuel additions.
If they don’t meet the necessary requirement by adding renewables themselves, they must meet it by buying RINs from other companies that have exceeded their quotas.
Unfortunately, Carl Icahn says that Wall Street has infiltrated the RIN market and taken control. He argues this market is now filled with “manipulation, speculation and fraud.”
As a result of Wall Street’s involvement, the price of RINs has jumped from one cent in 2012 to nearly $1 in 2016.
What Does This Mean for Oil Stocks?
Carl Icahn believes…
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